02-1160
Income Tax
Signed 2/14/03
BEFORE THE UTAH STATE TAX
COMMISSION
____________________________________
PETITIONER, ) ORDER
)
Petitioner, ) Appeal No. 02-1160
)
v. ) Account No. #####
)
AUDITING DIVISION ) Tax Type:
Income Tax
OF THE UTAH STATE TAX )
COMMISSION, ) Tax Year: 1998
)
Respondent. ) Judge: Davis
_____________________________________
Presiding:
G. Blaine Davis, Administrative Law Judge
Appearances:
For Petitioner: PETITIONER REP, CPA
For Respondent: Mr. Laron Lind, Assistant Attorney General
Mr. Brent Taylor, from the Auditing
Division
STATEMENT
OF THE CASE
This matter came before
the Utah State Tax Commission for an Initial Hearing pursuant to the provisions
of Utah Code Ann. '59-1-502.5, on January
23, 2003.
When Petitioner filed
his 1998 Resident Individual Income Tax Return, he deducted an amount of $$$$
on line 18 as an equitable adjustment.
The equitable adjustment was for income which was earned in the STATE by
Petitioner.
Respondent audited the
return of Petitioner and made an adjustment removing the $$$$$ deduction, and
requiring Petitioner to pay taxes on that amount as Utah income.
It is the position of
Petitioner and his CPA that the income was not earned in Utah and is therefore
not taxable in Utah, and that the only way to remove it is by making an
equitable adjustment.
The position of
Respondent is that Petitioner is domiciled in the State of Utah, and therefore
all of his income, wherever earned, must be included on his return, and then if
he pays income taxes to another state, he is entitled to claim as a credit
against the Utah tax, the amount paid to another state up to the maximum rate
that would have been paid in Utah on that amount.
APPLICABLE
LAW
Utah Code Ann.
§59-10-104 imposes an income tax "on the state taxable income, as defined
in §59-10-111 and §59-10-112, of every resident individual. . . ."
Pursuant to Utah Code
Ann. §59-10-112, "'state taxable income' in the case of a resident
individual means his federal taxable income (as defined by section 59-10-111)
with the modifications, subtractions, and adjustments provided in Section
59-10-114. . . ."
Utah Code Ann.
§59-10-111 provides that, "'federal taxable income' means taxable income
as currently defined in Section 63, Internal Revenue Code of 1986."
DISCUSSION
In this matter,
Petitioner is domiciled in the State of Utah.
Therefore, his income required to be included on his return includes
everything that was on his federal income tax return. Petitioner is not
entitled to deduct income earned in another state, but if he pays taxes to
another state, then he may deduct as a credit the amount of taxes paid to such
other state up to the rate of taxes imposed by the State of Utah on the same
income. There is no evidence that
Petitioner paid any income taxes to another state on the income which he
deducted on line 18.
DECISION
AND ORDER
Based upon the
foregoing, the Commission determines that the audit assessment made by
Respondent should be sustained, and the Petition for Redetermination is hereby
denied. It is so ordered.
This decision does not
limit a party's right to a Formal Hearing.
However, this Decision and Order will become the Final Decision and
Order of the Commission unless any party to this case files a written request
within thirty (30) days of the date of this decision to proceed to a Formal
Hearing. Such a request shall be mailed
to the address listed below and must include the Petitioner's name, address,
and appeal number:
Utah
State Tax Commission
Appeals
Division
210
North 1950 West
Salt
Lake City, Utah 84134
Failure to request a
Formal Hearing will preclude any further appeal rights in this matter.
DATED this 14th day of February , 2003.
____________________________________
G. Blaine Davis
Administrative Law Judge
BY ORDER OF THE UTAH STATE TAX
COMMISSION.
The Commission has
reviewed this case and the undersigned concur in this decision.
DATED this 14th day of February , 2003.
Pam Hendrickson R.
Bruce Johnson
Commission Chair Commissioner
Palmer DePaulis Marc
B. Johnson
Commissioner Commissioner